Explanation

1) In the firsts sentence from the clue ''the project’s leaders have failed to grasp the challenges involved'' which shows that the challenges are quite hard . They are obviously not immaterial which doesn't fit the blank. Dire means urgent and desperate which doesn't fit the context as well. So we are left with weighty which means of having serious or momentous consequence which perfectly fits the blank.
Correct choice is C

2) The clue lies in the first word ''despite''. The sentence tries to convey the idea that regardless of the reality of the situation the leaders are blind to it and are adding more complex stuff to make it worse and further unrealistic. Only quixotic fits the bill since it means the pursuit of unrealisable goals or idealistic without regard to practicality.
Correct choice is D